Abstract Pancreatic islet transplantation confers significant improvement in glycemic control and prevents life-threatening severe hypoglycemia in type 1 diabetes (T1D) patients. However, chronic immunosuppression which is required to avoid rejection of transplanted islets is associated with severe complications (e.g., protracted infections and increased risk of cancer). Moreover, islet graft rejection and/or recurrence of autoimmunity still occur despite immunosuppression. Thus, there is a significant need for novel approaches for inducing transplant immune tolerance to ensure durable graft acceptance without immunosuppression or its complications. An important step in addressing this need is increasing our understanding of transplant immune tolerance mechanisms. Our long-term goal is to define novel immune mechanisms involved in islet transplant tolerance with the ultimate goal of treating T1D with durable islet transplant without chronic immunosuppression. Our specific objective in this application is to define novel mechanism(s) underlying transplantation tolerance induced in established preclinical models of islet transplantation with allogeneic (allo) and/or autoimmunity. We also plan to study such mechanisms in a spontaneously occurring case of islet immune tolerance in NOD mice that do not develop autoimmune diabetes. It has been shown in rodents and nonhuman primates that treatment with anti-CD154 antibody increases islet graft acceptance significantly in the allo, xeno, or auto-immune settings. Our new findings in mouse using a modified and improved anti-CD154 regimen now show increased M2-like macrophages within islet grafts and locally elevated immune regulatory Th2 cytokines in association with tissue- specific, operational islet transplant tolerance, in recipients with and without a background of autoimmune diabetes. M2-like macrophages are implicated in local immune suppression within tumors and in cancer avoidance of immune clearance. We, therefore, hypothesized that M2-like macrophages play an essential role in the induction and maintenance of islet allograft immune tolerance in recipients with and without autoimmune diabetes. We will test this hypothesis using our innovative in vivo approach of islet transplantation in the anterior chamber of the eye (ACE), in two specific aims to achieve our objective in this application. The expected findings will provide novel mechanistic insight into induced and naturally occurring islet transplant tolerance, which will ultimately inform new approaches to inducing immune tolerance in islet transplantation as durable therapy of T1D without the serious complications of chronic systemic immunosuppression.